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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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  #11 (permalink)  
Old 04-06-2006, 08:11 PM
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Default Day care expenses

I just came back from Revenue Canada with the answer to your question.
I tried to claim child care expenses (that I paid directly to the day care) on a e-file tax program, however, I had to claim her as a dependant in order for the program to allow me to enter child care expenses. The program wouldn't allow me to NOT claim her as a dependant, but still claim day care.
I'm aware as a payor of child support, that I cannot claim a child as a dependant. So I went to Revenue Canada, and asked. What do I do when the software program won't let me do this. Her answer: File your e-file income tax return WITHOUT the child care expense, and without claiming her as a dependant. Then when you receive your refund, or you owe them, go to the Revenue Canada office with the child expense part of a revenue canada income tax form, with your receipts , and they will manually do the reassessment to give you a portion of your day care expenses back. If you don't want to go in person, she said you can fmail it separately, with a letter explaining you are not claiming the child as a dependant as you pay child support, but that you still had child care expenses to pay. You will need to provide copies of your day care receipts. The only problem with that way is she said it will take 6-8 weeks for you to get your refund. If you go in person, its automatically reassessed on the spot, and you don't have to give them a copy of your receipts.
Software programs are not set up to allow you to do this. If you claim day care expenses, the programs automatically claim that child as a dependant.
If you are doing your taxes manually, you can do it all at once, just that you'll have to submit all your receipts/paperwork.

Did any of this make sense?? I had to go in person to ask someone, because the Revenue Canada help line didn't know the answer either.

Catgirl


Quote:
Originally Posted by CatvsLion
Ok, I went to do my taxes and was under the impression that I could claim half the costs of daycare - well considering I'm not claiming a dependant (she is) I can't claim the daycare.

So how does one figure the 'after tax costs' of daycare? For instance - our daycare is $7800 / year, it's suppose to be split 50/50 after tax (net costs). But where is the calculation on this - because her tax refund isn't going to show just the daycare amounts... any help? (right now I'm paying half before tax costs)
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  #12 (permalink)  
Old 04-07-2006, 02:57 PM
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Quote:
Originally Posted by hubby
Cats,

Found this ...

"Child care expenses can be deducted from income for tax purposes by the person who pays expenses while a child is under 17 years of age. The deduction is $7,000 per child under 7, and $3,000 per child age 7 to 16 (the deduction is available in the year the child turns 16)."

So yeah, if you are the payor and giving your spouse daycare expense amounts every month ... the receiving spouse who pays the daycare expense can claim it? BUT, what happens if you arrange to pay for the daycare expense instead of giving it to the spouse as a payor? Does this mean YOU can claim it?

Hubby
I do. I get my own tax receipt and make my own claim.

When you see a lawyer or mediator (or judge) they have software called Divorcemate which calcualtes thinsg a little more level since that software takes into account all these hidden tax breaks, etc. For example, if you make $80K and the ex makes $40K, it appears you make twice as much. But Divorcemate takes into account the differences in taxation brackets, the refunds based on e-t-s, and so on. That $40K person may actually find themselves to have more net income.
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  #13 (permalink)  
Old 04-07-2006, 03:03 PM
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Catgirl,

You are correct. You can claim the expense as long as you have a receipt.

Most $30 tax software does not perform the function correctly. It is better to do your taxes manually when you are divorced.

BTW, with so many tax questions, loophole upon loopholes in the tax laws, punishment to the payer, and so on, you would think we were the first people getting a divorce. But like the custody and access laws, we are almost living in fear to speak up.
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  #14 (permalink)  
Old 09-25-2008, 10:22 AM
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I used a program called U-File and it allowed me to claim daycare expenses, but not eligible dependant. It's not quite as slick as Quicktax but less expensive and did the job.
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  #15 (permalink)  
Old 11-06-2009, 01:51 PM
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Default Separated and paying daycare expenses

I separated this year....I haven't filed my 2008 income tax return because my ex never files on time and I need his income which he isn't keen on disclosing to me....anyway, my question is, he is self-employed and, in the past, has always claimed the daycare costs we paid ....he makes much more than me gross but you know the self-employed and deductions....I want to file my return as it is already late ..... can I claim my kids daycare costs....we were still together in the home in 2008 but living in separate rooms....we physically separated in May 2009..he left the home....I have been paying all the daycare costs this year but he has been paying me monthly CS ... but this does not include the "extra costs of child rearing" which would be the daycare, etc....he's supposed to be paying a portionate share which we still have not reached an agreement on as he's dragging his heels....I don't think I can claim my kids daycare on my 2008 return, can I? I'm assuming when I finally get to my 2009 return, I can claim these expenses....
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  #16 (permalink)  
Old 11-06-2009, 11:33 PM
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Alextu,
I understand your questions, my ex and me were in a similar situations what with self-employed, deductions, gross income, daycare receipt to the lower income, etc.

If you paid the daycare, and you should have the receipts, then you take the tax deduction.

In 2008, here is the deal: You declare to each other that you are separating and you sleep in separate rooms. Ideally have some kind of written agreement with each other, or send you spouse a registered letter, or have some kind of email to refer to. This is if your ex has a reason to dispute the separation date.

So this is your official date of separation. There is a 90 day cooling off period, and then you inform Canada Revenue Agency. There is a form online that you can download and fill out. This is a declaration that you separated 90 days earlier. This will affect things like pensions, Child Tax Credit, and how you may split daycare receipts and such.

For the first year you were separated, you should consider the months before and after separately, and split receipts in proportion. So if you moved into separate rooms July 1st, then split the year 50/50. For the first part, your ex should take the deductions, for the second part, if you paid, you take those deductions. (This is because your ex was the lessor income for the first part of the year.)

Your tax return won't have a line to explain all this, but you shoud split the receipts accordingly so that if you are audited, then there is no funny business. CRA won't really know how much you paid for childcare Jan-June compared to July-Dec, so it may be up to you to split the receipts, but if you are audited you will have to explain yourself. Just do it properly then.

You may only have 1 receipt. Make a photocopy for your ex, or require a photocopy from him. If he refuses, then explain to the daycare that the receipt was "lost" and get a copy. Only use the proportion you are entitled to.

If you did not inform CRA that you separated, then do it immediately and give them the date. You should really do this asap to straighten out the Child Tax Credit. They will tell you how it is split according to the time each of you have the children. They will collect any overpayment to one parent, and send it to the other, but they will not pay retroactively if your income would indicate a larger sum, if you wait a year to tell them.

Now, if you only just informed them this May that you separated due to different addresses, you may have to correct the date of separation to use the tax receipts from daycare. Call the CRA help line, and also there is a lot of useful information available on the website .

Finally, if you are paying the actual amount and he is not paying his share in addition to CS, he is out of luck for tax receipts, unless you are willing to be generous. You are the payor, the fact that you draw the amount out of CS cheques doesn't entitle him to any deductions for child support.
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  #17 (permalink)  
Old 11-10-2009, 01:39 PM
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Default Day care expenses

thanks all for the information....it really helps....
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  #18 (permalink)  
Old 10-09-2014, 11:37 AM
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Default I'm still confused

It's been a while but I need a little guidance calculating after tax daycare fees and I've read a number of posts but am still lost (I don't do my own taxes).

I have her line 150 and the daycare costs but don't know how to use that to find the after tax costs. I used a formula I found in the forum to find our percentages.

Sorry but help
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  #19 (permalink)  
Old 10-09-2014, 08:49 PM
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Daycare costs of $1000 reduce your taxable income by $1000. If your marginal tax rate is 24% then you would get $240 back.

Just go on to TurboTax/CuteTax/TaxChopper online (or similar) and plug in your earned income 1) with daycare costs and 2) without daycare costs, and calculate the difference in tax owing between 1) and 2).

Even easier: Plug in your numbers here: TaxTips.ca - 2013 and 2014 Canadian Income Tax Calculator.
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  #20 (permalink)  
Old 10-10-2014, 11:37 AM
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Angry Thanks but still confused

I used the link you provided and according to the numbers I get back I'll be paying more Pro Rata than I am now with no increase in wages, she makes more and is paying less than 2 years ago for daycare. I'm sure I'm doing something wrong. I may have to visit a lawyer or an accountant to get this figured out.
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